Strategic Planning: Keeping The Planning Process Simple

Strategic Thinking

Owners tend to focus on day-to-day problems such as production quotas, taxation-reporting requirements such as the business activity statement (BAS) and GST, and vendor relations. Operational responsibilities stretch personal capacities to the limit and leave little time or energy for key members of the management team to think strategically about the future. Yet strategic decisions are vital for the businesses’ competitiveness, survival, and success in the marketplace.

Competitiveness

Thinking and planning strategically can help the business move from a reactive mode to a position where the firm has a set clear direction, can anticipate change, and can take competitive advantage of opportunities. Thus it is imperative for key members of the business to match their organization’s capabilities with the opportunities in the marketplace in order to accomplish its overall objectives.

In formulating strategy, the owner and key management must thoroughly understand the industry in which they operate. In other words, management must conduct an industry analysis which focuses on the following five market elements:

1. the competitors of the business;
2. potential entrants into the market or sector that the business operates in;
3. the effect of competition from equivalent products;
4. the bargaining power of customers, and;
5. the bargaining power of suppliers.

The collective effect of these five market forces shapes the businesses’ profit potential, and in general, profit potential decreases with greater competition, stronger potential entrants, products that are similar, and tougher customers and suppliers.

Some Guidelines

While it is important that any effort made to implement strategic planning fits the businesses’ unique position and circumstance, there are several elements common to most successful efforts:

• Focus on Strategic Thinking – develop questions and ideas about future issues and challenges facing the business;
  
  
• Develop a Clear Vision – set a clear future direction for your business. Your vision should be simple, clear, and compelling as this vision becomes the driver for strategy and action;
  
  
• Stay Customer Focused – learn what your customer’s value. Don’t rely soley on indirect information from sales or other sources, but go directly to your customers;
  
  
• Focus on a Few Key Strategies – pick the most pertinent (say three to five) strategies that will lead your business to potential breakthroughs;
  
  
• Assign Accountability – follow through is where most organizations lose their focus. Unless accountability is assigned to following through on strategies, appropriate opportunities are missed because urgent day-to-day problems get priority;
  
  
• Integrate with Operations – while scrutinizing your day-to-day operations, regularly examine whether your organization is achieving its strategic objectives. Modify the plan accordingly and view it as a dynamic planning process.

Conclusion

Strategic planning in any business can be made simple, but with one proviso, it cannot be made easy. There are very tough issues to be considered, but following a simple process makes this difficult task pay significant dividends.

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